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Dan Haar: UTC loss heightens state’s huge challenge

The United Technologies Corp. headquarters in Farmington. The company plans to move its headquarters to the Boston area after a merger with Waltham, Mass.-Raytheon Co. in 2020.

Photo: Dan Haar/Hearst Connecticut Media

Near the end of the marriage-made-in-heaven conference call Monday morning between United Technologies CEO Greg Hayes and Tom Kennedy, his counterpart at Raytheon, Kennedy said why the new company couldn’t possibly keep its headquarters in Connecticut.

The Raytheon CEO never mentioned Connecticut or the headquarters. But the message was clear.

He was talking about “complementary technologies,” fusing the latest commercial aerospace gadgetry from UTC with sci-fi defense wizardry from missile-maker Raytheon into one menu for the Department of Defense.

“We constantly hear word about the DOD wanting to go to Silicon Valley for commmercial technologies. Well, they don’t have to go to Silicon Valley anymore,” Kennedy declared. “We have that technology with the combined companies. It’s very complementary technology. We’re applying that technology in the commercial world. We’re applying that technology in the defense world.

“And so they’re going to have the best of the best.”

The best of the best, in those worlds, prefer a very, very small number of places. Metro Boston. New York. Greater Washington, D.C. Silicon Valley and the Bay Area. Maybe Seattle. That’s the reality of modern American demographics that Kennedy was talking about.

It’s about people and where they want to live, not just technology.

That should both comfort and alarm Connecticut if the merger goes through and we lose the head office of the state’s largest corporation — the business that has defined the state since it launched the aviation business in 1929.

On the one hand, despite the nonsense that Connecticut’s Nattering Negative Nutmeg Naysayers are dribbling, the likely exit of the UTC headquarters in 2020 is utterly unrelated to tolls, pension liabilities, the income tax or any of the other political-economic debates that tear us apart.

The sky is not falling on Connecticut. UTC’s Pratt & Whitney isn’t taking its 13,000 or so Connecticut employees (the company won’t give an exact count) and jetting off to West Palm Beach, where it has a winter home, I mean, a large design and manufacturing center. Ditto the 3,000-plus UTC Collins Aerospace workers at the old Hamilton Standard site in Windsor Locks.

On the other hand, it shows us that Connecticut has a long way to go with an urgent need to keep competing on the same field where we’ve won some and lost some. Unlike in our grandparents’ day, when tens of thousands of workers flocked to East Hartford to build Pratt WASP engines for World War II, companies follow people nowadays.

That means big metro areas that are costly but cool.

What we have is a big loss — even though it’s just 100 corporate jobs in the initial move, out of more than 18,000 at UTC in Connecticut. We’re likely to lose more jbs with the expected 2020 spinoffs of Otis Elevator and Carrier, the massive air conditioning and building systems business.

No dount about it, this is a bad way for Gov. Ned Lamont to start his first summer after his first General Assembly session. It’s not just another blip in the state’s economic history and no one should spin it that way.

We’ll lose more than the prestige, the philanthropy and the spinoff work that a global company headquarters brings. At stake is a mindset, a sharp attention that says “this is da place” for a giant company that matters — and it affects the whole state, not just metro Hartford.

“Without the headquarters being here, there’s just less of a focus on managing local issues and getting local people to deal with it,” said one person who has done work for UTC and some of its subsidiaries.

Connecticut does have a roadmap if we care to follow it, or maybe I should call it a flight plan. It’s about building up cities more, not less — especially New Haven.

“We need to create an environment where companies feel like they can recruit and thrive,” said David Lehman, the governor’s top economic adviser and commissioner of the state Department of Economic and Community Development.

“We’re never going to create our own Boston but Connecticut needs to create a city that can compete in our own way, in a Connecticut way, Lehman added.

That means, he said, “New Haven needs to compete with Cambridge and we need to do it head-on.”

He envisions doubling the New Haven population in 20 years or less. Wow.

The good news is we’re not starting from nothing. Lehman’s idea builds on UTC’s existing jobs — which he seems convinced will grow, not shrink in Connecticut. He also views the “moat of competitive advantage” extending beyond state lines, so a strong Raytheon Technologies, as the new company would be called, can help this state as well as Massachusetts.

Supporting that idea, Hayes emphasized in the conference call that only about 1 percent of combined company sales are from directly competing products. Somewhat troubling is the vow by him and Kennedy to cut $1 billion from annual costs. That’s only a couple of percentage points of total expenses but it’s a big number, equal to maybe 12,000 jobs in the company or its supply chain.

Hayes failed if he intended to calm our fears by saying, “Raytheon Technologies will retain a strong presence in Connecticut for years to come.” That’s like saying you’re terribly fond of your wife.

Still, to Lehman’s point, Connecticut remains high on the list of states for engineering and science excellence. Yale University, a climbing UConn, a 300-year tradition of invention with a very large number of PhD’s and patents per-capita, a hefty number of Fortune 500 companies and, well, UTC all add up.

No, we’re not Boston in tech. And even if we are that good, we don’t also have the financial and management clout in a nearby population ready to come to work at Raytheon Technologies.

So what does that mean for Connecticut’s role in a $100 billion-plus corporation with only one of the four main units based inside its borders?

We already saw in 2015 that Hayes, who launched a brief courtship with Honeywell, could put UTC in play despite its massive size. Combine that with Kennedy’s comment about Silicon Valley and it’s clear Hayes and Kennedy have a superhero syndrome, like many giant company CEOs.

In a stock-pooling merger like this one, the larger company, in this case UTC, doesn’t offer a premium to shareholders of the smaller company. No money means the larger partner has to offer some other enticement to get the girl to the dance.

And that enticement was, “Hey, you’re in Boston? We’ll come to your back yard and we’ll take your name.”

Not a great result for Connecticut, but not a calamity, especially if all those thousands of Pratt and Collins jobs stay put, and grow.